Being forgetful during a crisis is hazardous!!!

One major pain point in times of this crisis comes from the fact that businesses lose sight of the overall business objectives while reactively maneouvering the downturn.

My thoughts are more in the context of organizations which spawn many other firms from within i.e. a holding company managing a number of large-scale projects.

BUSINESS LOGIC 1

Observation
When the times were good and power was directly derived from the size of the team/organization people commanded, every project was spawned into a separate organization with its institutional overheads. So, what essentially started off as projects being run by a single firm ended up being ‘n’ number of firms coming under one umbrella of the originating company.

Implications
Along with the size comes the cost of managing a gigantic organization. In the context I am basing my thoughts on, these projects being in a conceptualization / early-development stage were by no means having any revenue stream (leave alone it being sustainable) to be self-reliant as an organization. So, when the crisis came along… sustainability became the key question on everyone’s minds.

Where did the logic go wrong?
It is so very commonsensical that there is a maturity cycle for any long-term initiative that an organization undertakes. Firstly, a project runs on a fixed timeline (a start date and a definite end date). So, a project should remain a project until it completes it intended objective and then, when it seems to have reached a certain stage of maturity whereby it can sustain on its own and be an independent organization in itself, should it be spun off from the originating organization.

Had this approach been taken, the current downturn would have been far easier to ride out. There wouldn’t have been a reckless spending on opex in the past, no excess manpower to be laid off in a disappointing manner and no questions marks of the magnitude that are staring at us now!

BUSINESS LOGIC 2

Observation
When an organization was envisioned in the postive, growing economy, even the thoughts of companies not being self-profitable but being there for a larger good was considered rational.

Implications
Many projects have been undertaken with a very sensible big-picture thought of leveraging these projects to propel many other commercial ventures managed by the larger stakeholders of the local economy. However, when the crisis dawned, all this talk of “larger good of the local economy” was thrown out of the window and everyone was asking “where’s the money?” and “is it profitable or not?”

Where did the logic go wrong?
The envisioning of any organization should never be forgotten even in good times or bad times. A strategic project for the larger good of the local economy can rarely be profitable on a commercial basis. And if the dichotomy was not internalized by the powers-to-be, I guess they were in the wrong business in the first place. And by turning over the basic idea behind running a business, more harm might be done to the larger economy in the long-term and hence there is a strong need to stick to the basics and look for other ways to get these initiatives going.

Disclaimer: These are just my personal opinions about a business case I’ve come to know of. Plus, I have not taken any names here and so I shouldn’t be held responsible for maligning any real organization I am associated with or otherwise.